Which of the following correctly describes an installment note? paid at maturity

Question

Which of the following correctly describes an installment note? paid at maturity of interest decreases over the life of the note. of interest increases over the life of the note. amount of interest remains constant over the life of the note. 2. a. An installment note requires equal interest payments with the entire principal balance b. An installment note requires equal payments of interest and principal in which the amount c. An installment note requires equal payments of interest and principal in which the amount d. The installment note requires decreasing payments of interest and principal in which the

Explanation / Answer

Answer:

B) An installment note requires equal payments of interest and principal in which the amount of interest decreases over the life of the note

Explanation to the answer:

An installment note is the liability of the borrower for repaying principal amount to lender in a series of equal periodic payment and such periodic payment might be quarterly, half yarely, monthly or annually until .

In such note there are equal payments so with the passing of time portion of principal amount increases and portion of interest decreases so we can say that out of given options, Option: B is most correct that installment note requires equal payments of interest and principal in which the amount of interest decreases over the life of the note

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